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Suppose that the cost curve of a physician-firm has the form a. What is the average variable cost...

Question:

Suppose that the cost curve of a physician-firm has the form

{eq}TC=1000+50Q-10Q^{2}+Q^{3} {/eq}

a. What is the average variable cost curve?

b. What is the marginal cost curve?

c. Find the level of output at which AVC reaches the minimum Q*.

d. Find the level of output at which MC reaches its minimum.

e. Express the output at which marginal cost reaches its minimum relative to Q*.

Cost Curves:

Total cost of a firm consists of all fixed costs and the variable cost that depends on the level of production. The average cost shows the production cost per unit of the commodity or service produced. Marginal cost shows the cost of producing the last unit of the commodity or service.

Answer and Explanation:

a) If we break down the total cost (TC) to total fixed cost (TFC) and total variable cost (TVC), we would have:

{eq}TFC = 1000 {/eq}

{eq}TVC =...

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Learn more about this topic:

Total Cost in Economics: Definition & Formula

from Introduction to Business: Homework Help Resource

Chapter 3 / Lesson 16
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